A down payment is required when you apply for a home loan in Colorado Springs and anywhere else, for that matter. But how much you’ll need depends on the specific type of loan you are applying for, your goals, and your current financial situation. You should put down as much as you can as this will help increase your chances of getting approved. This will also help you avoid mortgage insurance and allow you to pay more affordable monthly payments.

But how much is a down payment on a house? In this two-part article, we’re going to dive deeper into this topic:

What Is a Down Payment?

A down payment is a partial payment that you pay upfront when you are purchasing a house. It lessens the amount you borrow from a lender and is typically reflected as a percentage of the home’s sales price. For instance, if a mortgage lender says they need a 3% down payment on a house that costs $250,000, you’ll know you need to raise at least $7500 at closing.

How Much Is a Down Payment on a House?

Here is what many people do not know. The amount that you’ll need to put down on a home depends on the specific type of loan you are applying for and the requirements of the lenders themselves. Factors like your income, credit score, cash on hand, and debt-to-income ratio also come into play.

What Are the Minimum Down Payment Requirements?

One of the many factors that affect how much you need to raise for the down payment is the type of loan. Now, based on this factor alone, here’s the minimum down payment required:

Conventional Loan: 3% to 25%

Conventional loans’ down payment requirements vary depending on different factors and the lenders themselves. For instance, first-time homebuyers and those with low or moderate income might qualify for a loan with only a 3% deposit. For most applications, though, the minimum is 5% for a primary residence. For second homes or an investment property, the down payment usually starts at 10% and could go as high as 25%. As mentioned, other factors are considered, including your financial situation and creditworthiness.

It is worth noting that you would need to put down at least 20% if you want to avoid PMI.

Jumbo Loan: 10%

Jumbo loans are a type of conventional loan that don’t meet the Fannie Mae and Freddie Mac standards for loans. This year that means any conventional type of loan that isn’t blacked by a government agency and is over $647,200. High-cost areas have higher limits, though. Jumbo loans usually require a 10% down payment or higher.

FHA Loan: 3.5%

For a loan that the Federal Housing Administration insures, you are required to pay a minimum of 3.5% for the down payment. That is if you have a credit score of 580 or higher. It means you will get the maximum financing from FHA at 96.5%. For those with a lower credit score that falls between 500 and 579, you can still be approved, but you’ll have to raise 10% of the home’s value for the down payment.

Similar to Conventional Loans, FHA loans with less than a 20% down payment will need mortgage insurance. However, the difference is that you’ll have to pay an upfront mortgage insurance premium when you close, equating to 1.75% of the total loan amount, as well as an annual premium.

How much you’ll be paying and for how long largely depends on our down payment amount, as well as your repayment term and loan amount.

VA Loan and USDA Loan: 0%

The U.S Department of Veterans Affairs and the USDA loans are available to those who plan to purchase properties in designated rural areas. The USDA’s website shows maps that reflect which areas are considered eligible.

Neither of the two loan programs requires mortgage insurance. With VA loans, you will have to pay a one-time funding fee that ranges from 1.4% to 3.6%, depending on how many VA loans you have had and how much you’re putting up for the down payment. With USDA loans, on the other hand, you’ll have to pay an upfront fee and an annual guarantee fee. Both of these are independent of your down payment.


There you have it, folks! As you can see, knowing the different down payment requirements for different types of home loans is pretty important. So if you are planning to apply for a home loan in Colorado Springs, start saving up now because the more you have on hand when you apply, the better.

For more information on down payment for a mortgage in Colorado Springs, check out the second part of this article, where our experts from Total Lending Concepts answer more questions about this!